PRICE OF RECOVERABLE VALUE (RV) IN CANE
AUGUST 2010 RV PRICE FOR 2010/11 SEASON
| RV Price R2,549.99 |
| 'd' factor 0.363312 |
Note :
- The RV price for 2010/11 in respect of cane delivered in July 2010 was declared at R2 549.99 per ton This represents an increase of R14.41 per ton RV compared with the previous price (cane delivered in June 2010). The main drivers of the increased RV price were the 76 584 ton drop in sugar production and the higher weighted average world market price.(19.86c/lb vs. 19.23c/lb). The overall change in RV price was negatively impacted by the lower sugar:RV ratio (94.48% vs 94.82%) and the stronger weighted average R/$ exchange rate (7.47 vs. 7.62) .
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DIVISION OF PROCEEDS
CANE PAYMENTS SYSTEM
HISTORICAL PRICES
The Division of Proceeds - How does it work?
Total proceeds from the sale of local market and export market sugar and molasses are accounted for to the South African Sugar Association. After deduction of industrial charges, the nett divisible proceeds are shared between growers, millers and refiners in terms of a fixed division of proceeds provided for in clause 166 of the sugar Industry Agreement. A provisional recoverable value price is declared monthly during the season which is applied to all cane delivered to date. A final RV price for the season is declared in March of each year.
Cane Payments System
At the start of the 2000/01 season, the Recoverable Value (RV) payment system replaced the sucrose payment system. The RV system recognises the effect of Sucrose % cane, Non-sucrose % cane and Fibre % cane on sugar production. The effects of these factors on sugar production in the factory is illustrated in the following diagram.
The RV formula is more commonly represented in the format below and the different coefficients explained.
| Where |
S |
= |
Sucrose % cane delivered |
| |
N |
= |
Non-sucrose % cane delivered |
| |
F |
= |
Fibre % cane delivered |
| And |
d |
= |
The relative value of sucrose lost from sugar production per unit of Non-sucrose taking into account the value of molasses recovered per unit of non-sucrose. |
| |
c |
= |
The loss of sucrose from sugar production per unit of Fibre. |
The "d" and "c" factors are approximately 0,42 and 0,02 respectively indicating the higher importance of non-sucrose on cane quality relative to fibre. The "c" factor is calculated annually based on a three season rolling average. The "d" factor is calculated monthly and is based on a three season rolling average and current sugar and molasses price estimates. Therefore, a grower’s RV % cannot be compared from one month to the next to monitor agronomic performance because the RV % is derived from the industrial prices of sugar and molasses; parameters that change monthly and cannot be controlled by individual growers. Growers should rather monitor the separate cane quality parameters, viz sucrose, non-sucrose, fibre and others.
Cane quality or RV % cane is increased by increasing maturity, freshness and cleanliness of the cane delivered to the mill. These three broad agronomic or management factors are presented in the following table.
| Increased Maturity of Cane |
Increased Freshness of Cane |
Increased Cleanliness of Cane |
General husbandry
Cutting cycle, age of cane
Varieties
Soils and aspect
Ripeners
Irrigation |
Burning frequency
Road system and zones
Type of haulier and mill yard
Deterioration times |
Topping height
Base cutting
Reducing soil
Reducing trash |
If you require any assistance with any technical issues please don’t hesitate to contact Adrian Wynne (Deputy Director Industrial Affairs).
Historical RV Prices
| Season |
Prices (Rands) |
| 2008/2009 |
2 011.18 |
| 2007/2008 |
1 701.90 |
| 2006/2007 |
1 701.86 |
| 2005/2006 |
1389.80 |
| 2004/2005 |
1297.19 |
| 2003/2004 |
1357.01 |
| 2002/2003 |
1368.79 |
| 2001/2002 |
1352.14 |
| 2000/2001 |
1105.00 |
| 1999/2000 |
971.09 |
| 1998/1999 |
1046.62 |
| 1997/1998 |
1036.19 |
| 1996/1997 |
951.07 |
Note: For the 1996/97 to 1999/2000 seasons the Sucrose prices have been converted to Recoverable Value prices.
April 2010 |
March 2010 |
R2 465.32 |
R2 480.76 |
'd factor 0.356902 |
'd' factor = 0.374353 |
|